More batteries, less solar: California's solar turmoil in charts

California slashed the value of rooftop solar for customers of its three biggest utilities last year — and installations of residential solar systems in the state have fallen to near-three-year lows since then. 

But drawing firm conclusions about how the controversial shift in net-metering policy will shape California’s rooftop solar market over the long term — and affect the state’s grid-decarbonization and energy-equity goals — is a lot more complicated than it looks. 

Just ask Galen Barbose, staff scientist at the Department of Energy’s Lawrence Berkeley National Laboratory. Last week, he released a report compiling the latest data on California’s residential rooftop solar market, including the data point showing a marked drop in installations in the first three months of 2024. 

Barbose also scrutinized battery-storage attachment rates, the distribution of solar adopters by geography and income, third-party ownership, system sizing, pricing, and installer market share. The goal was to reveal ​“initial empirical insights into how the market has evolved over the past year, confirming some expectations while also revealing several striking surprises,” he wrote in the report. 

But ​“we have to be careful about not overreaching from the data over this past year,” Barbose stressed in an interview with Canary Media — because ​“this was a strange last year.” 

A year of twists and turns for California rooftop solar

There was a huge rush to apply for and secure interconnections of rooftop solar systems to the grid in the runup to April 2023, when the legacy net-metering (NEM) tariff was officially replaced by the ​“net-billing tariff” (NBT) that the California Public Utilities Commission imposed on customers of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. 

That caused installations to spike to record levels throughout the spring and summer of 2023, as all of the projects approved under the old tariff got underway. Installations under the legacy tariff continued even through the first quarter of 2024, according to LBNL data. 

Backers of the CPUC’s decision to reduce compensation for rooftop solar argue that California’s solar market remains robust — just not as overheated as during the historical jump in installations last year. 

“[T]he much more generous compensation for systems installed before April 15 drove a gold rush during the first three and a half months of 2023,” Severin Borenstein, head of the Energy Institute at the University of California, Berkeley’s Haas School of Business and a foe of the state’s previous net-metering regime, wrote in a blog post last month. ​“Many of those early-2023 buyers would most likely have been later-2023 buyers were it not for the rush to install before April 15 and lock in NEM 2.0 rules.” 

But there’s also evidence that the far less lucrative economics of the net-billing tariff have severely crimped ongoing prospects for California rooftop solar installers. The rate of installations under the new net-billing tariff have lagged historical rooftop solar installation rates, averaging about 8,000 per month over the first quarter of 2024. That’s a lower rate of rooftop solar installation than in any month under net metering going back to May 2020, according to LBNL’s data. 

In November, the California Solar and Storage Association (CALSSA) reported that monthly solar sales — a more forward-looking data point than installations — fell by 77 to 85 percent between May and September of last year compared to the same months in 2022. 

The trade group also warned that solar installers expected to have to lay off nearly 17,000 workers, or about 22 percent of the state’s rooftop solar workforce — a level of job losses ​“reminiscent of the Great Depression,” according to Bernadette Del Chiaro, CALSSA’s executive director. 

LBNL’s report includes forward-looking data that backs up CALSSA’s dire forecasts. One such metric is ​“quote activity” — requests for price quotes from customers interested in installing solar. 

Quote requests from online solar marketplace EnergySage spiked before April 2023, then fell to about 60 percent of historical levels from 2019 to 2021. ​“While the EnergySage marketplace may not perfectly represent the California market overall, the fact that quote activity has not meaningfully picked back up is perhaps the clearest signal yet of a substantial and sustained market contraction,” Barbose wrote in his report. 

LBNL also highlighted data that appears to support a key concern of CALSSA — that the new net-billing regime is harming smaller solar installers. According to the report, only half of the roughly 2,500 companies that installed at least one solar system in the past 12 months have completed a system under the new tariff structure.